There are more retirement millionaires than ever before. In the third quarter of 2020, approximately 262,000 people had at least $1 million in their 401(k), according to research from Fidelity Investments, a record high.

Reaching $1 million in retirement savings may sound like a goal that's only achievable for those who are already wealthy. However, it is possible to retire a millionaire on a modest salary -- as long as you start saving early enough.

Young woman putting dollar bill into a piggy bank

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How far will $500 per month go?

The median earnings among U.S. workers is approximately $48,000 per year, according to data from the Bureau of Labor Statistics. If you were to save $500 per month, that would amount to 12.5% of your salary. Most experts recommend putting at least 10% to 15% of your income toward your retirement fund, so $500 per month is right on target according to this guideline.

However, whether $500 per month will make you a millionaire will depend on when you started saving.

Say you're earning a modest 7% annual rate of return on your investments, and you plan to retire at age 67. By saving $500 per month, you'd need to begin saving at age 29 to reach the million-dollar mark by retirement age.

If you're already past that age, don't fret. You may still be on track to reach your goal if you're investing in a 401(k).

Saving more with your 401(k)

One of the biggest advantages of investing in a 401(k) is that you may have access to employer matching contributions. With matching contributions, you don't need to save as much on your own to accumulate $1 million.

The average employer match is 3.5% of a worker's salary, according to the Bureau of Labor Statistics. So if you're earning $48,000 per year, you'd be eligible for up to $1,680 per year (or $140 per month) in matching contributions.

If you were investing $500 per month out of your own pocket plus an extra $140 per month from your employer, your savings will grow faster. In this case, you would have to start saving at age 32 to reach $1 million by age 67, assuming you're still earning a 7% annual rate of return.

Keep in mind, too, that with employer matching contributions, the amount your employer contributes will increase as your salary increases. Most workers will earn raises over time, which means you'll receive more each month in matching contributions, too.

What to do if you're falling behind

If you're past your mid-30s or can't afford to scrape together $500 per month, that doesn't mean you should give up on saving altogether. Depending on how far behind you are and how much you're able to save, you may or may not be able to save $1 million. However, saving anything is better than saving nothing.

Even if you don't have much to save, your money will go further the more time it has to grow. If you're waiting until you have more money to invest, you're missing out on your most valuable resource: time.

No matter how much you can afford to invest right now or what your retirement goals look like, starting now is better than waiting. If you start early enough, you may be able to retire a millionaire. But even if that goal is out of reach, saving as much as possible will go a long way toward achieving a financially secure retirement.